The pair is holding around 109.00 handle in early European trading, after hitting fresh recovery high at 109.20 in Asia and being so far supported by 200SMA, which reverted to support after recovery broke and close above it.
Monday’s long-tailed daily candle that was formed after strong downside rejection (the pair hit fresh five-month low at 108.11 on Monday) underpins and may spark stronger correction as slow stochastic is emerging from oversold territory and daily RSI is on the border of oversold zone.
However, negative daily studies see limited upside action, before bears resume, as general sentiment is firmly bearish on geopolitical tensions that favor yen’s safe haven buying.
Falling 10SMA offers strong barrier (currently at 109.74) which should ideally cap and keep intact upper pivots at 110.00/25 (psychological barrier/Fibo 61.8% of 111.56/108.11 downleg), break of which is needed to signal stronger recovery.
Conversely, early recovery rejection and return below 200SMA would signal an end of corrective phase and shift near-term focus lower again.
Res: 109.20, 109.74, 110.00, 110.25
Sup: 108.82, 108.55, 108.11, 107.84
